MercoPress. South Atlantic News Agency

Australia clears way for Billiton takeover of Rio Tinto

BHP Billiton proposed 114 billion US dollars hostile bid for rival mining giant Rio Tinto has been cleared by Australia's competition watchdog.

The Australian Competition and Consumer Commission said any tie-up between the two firms "would not be likely to substantially lessen competition". BHP Billiton still has to wait for a ruling by the European Commission, which is not due until January. Rio Tinto has so far rejected all BHP Billiton bid proposals. Analysts said the clearance in Australia made it more likely that European regulators would also back a deal. "It's going to be very difficult for a competition commission in Europe to go against the findings of the ACCC here, given arguably the ACCC's probably closer to the action and more capable of understanding the ramifications," said Tim Schroeders, a portfolio manager at Pengana Capital. "There's no guarantees, of course, because the flip side of that may be that European steel mills have a lot more say and lobbying power in convincing the European Commission otherwise." A tie-up between BHP and Rio Tinto would create a firm controlling a third of the world's iron ore market. Global steel companies have expressed their opposition to any deal. Both BHP and Rio Tinto are Anglo-Australian companies, with their shares listed in London and Sydney. Both companies are involved in other minerals including hydrocarbons. BHP has joined Falkland Oil and Gas Limited and is expected to drill two exploratory wells Falkland Islands waters in the second half of 2009.